California Home Sales and Price Gains Temper in May as Buyers
Confront Housing Affordability Constraints and Low Inventory, C.A.R.
Reports

June 17, 2014 01:09 PM Eastern Daylight Time

LOS ANGELES--(BUSINESS WIRE)--California home sales eased slightly in May as a shortage of homes and
housing affordability concerns held back would-be home buyers, the CALIFORNIA
ASSOCIATION OF REALTORS® (C.A.R.) said today. Meanwhile,
the median home price posted higher from both the previous month and
year for the third consecutive month and remained at its highest level
since December 2007.

Closed escrow sales of existing, single-family detached homes in
California totaled a seasonally adjusted annualized rate of 391,030
units in May, according to information collected by C.A.R. from more
than 90 local REALTOR® associations and MLSs statewide. May marked the
seventh straight month that sales were below the 400,000 level and the
tenth straight decline on a year-over-year basis. Sales in May dipped
0.6 percent from a revised 393,480 in April and were down 9.5 percent
from a revised 432,140 in May 2013. The statewide sales figure
represents what would be the total number of homes sold during 2014 if
sales maintained the May pace throughout the year. It is adjusted to
account for seasonal factors that typically influence home sales.

“Since last summer, the market has been transitioning to a slower pace
of sales, somewhat higher inventory and less upward pressure on prices,”
said C.A.R. President Kevin Brown. “Generally speaking, buyers are
feeling less urgency to buy as affordability has become more of an issue
and lending standards continue to remain tight. However, a recent surge
in mortgage applications, due partially to declining interest rates, may
indicate that higher housing demand can be expected in the coming months.

For the third straight month, the statewide median price of an existing,
single-family detached home rose both month to month and year to year.
May’s median price increased 3.7 percent from April’s median price of
$449,360 to $465,960 and was up 11.7 percent from the revised $417,140
recorded in May 2013. The statewide median home price has increased year
over year for the previous 27months, marking more than two
full years of consecutive year-over-year price increases and the 23rd
straight month of double-digit annual gains. The median sales price is
the point at which half of homes sold for more and half sold for less;
it is influenced by the types of homes selling as well as a general
change in values.

“While home price increases have tempered over the past few months,
prices are still nearly 12 percent higher than a year ago, which is
presenting affordability challenges to home buyers,” said C.A.R. Vice
President and Chief Economist Leslie Appleton-Young. “And though housing
inventory is up from last year, it’s still half of what is considered
normal, with some of it being overpriced. A tempering in home price
increases and the recent drop in mortgage rates, however, should help
spark the market in the upcoming months.”

Other key facts from C.A.R.’s May 2014 resale housing report include:

Housing inventory was unchanged in May, with the available supply of
existing, single-family detached homes for sale holding steady at 3.6
months. The index was 2.6 months in May 2013. The index indicates the
number of months needed to sell the supply of homes on the market at
the current sales rate. A six- to seven-month supply is considered
typical in a normal market.

The median number of days it took to sell a single-family home fell to
31.6 days in May, down from 33.8 days in April but up from 27.1 days
in May 2013.

Mortgage rates fell in May, with the 30-year, fixed-mortgage interest
rate averaging 4.19 percent, down from 4.34 percent in April but up
from 3.54 percent in May 2013, according to Freddie Mac.
Adjustable-mortgage interest rates in May averaged 2.43 percent, down
from 2.44 in April and down from 2.55 percent in May 2013.

Note: The County MLS median price and sales data in the tables are
generated from a survey of more than 90 associations of REALTORS®
throughout the state, and represent statistics of existing single-family
detached homes only. County sales data are not adjusted to account for
seasonal factors that can influence home sales. Movements in sales
prices should not be interpreted as changes in the cost of a standard
home. The median price is where half sold for more and half sold for
less; medians are more typical than average prices, which are skewed by
a relatively small share of transactions at either the lower-end or the
upper-end. Median prices can be influenced by changes in cost, as well
as changes in the characteristics and the size of homes sold. Due to the
low sales volume in some areas, median price changes may exhibit unusual
fluctuation. The change in median prices should not be construed as
actual price changes in specific homes.

Leading the way…® in California real estate for more than 100
years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org)
is one of the largest state trade organizations in the United States
with 165,000 members dedicated to the advancement of professionalism in
real estate. C.A.R. is headquartered in Los Angeles.